Gold: Chinese Life Insurance companies become members of the exchange  - TDS

China Lifecos are already on the bid in Gold. The Shanghai Gold exchange admitted four Chinese Life Insurance companies as members of the exchange, enabling them to purchase Gold as part of a pilot program that could grow the network of Gold buyers and create a massive new buying impulse, TDS' Senior Commodity Strategist Daniel Ghali notes. 

Gold prices continue to rally north of $3000

"These four lifecos alone have nearly 13Trillion yuan in total assets and represent nearly 2/3 of the total potential buying impulse from this pilot program. We estimate that a 1% allocation into Gold amounts to roughly $17.8bn of new fund inflows, equivalent to roughly 183 tonnes (5.9mn toz)." 

"This could amount to a massive buying impulse, equivalent to roughly half of the yearly global official central bank purchases on average over the last five years. While there is no timeline associated with building this allocation, these firms have demonstrated interest in doing so, having reported their first such purchase within the first trading session in which they received membership." 

"In today's market context, which already features near-perfect inverse correlation between two of Gold's major buying cohorts, this could add another element to the asymmetry that is benefiting prices. Conversely, the downside is limited by the significantly smaller scale of macro fund positioning. Expect more FOMO from funds ahead as prices continue to rally north of $3000/oz."